exv10w3







EXHIBIT 10.3





December 21, 2009




BorgWarner Inc.

3850 Hamlin Road

Auburn Hills, Michigan 48326

Attention: General Counsel




Attention: John J. Gasparovic, General Counsel and Secretary




Ladies and Gentlemen:




     Reference is hereby made to that certain Credit Agreement dated as of July 22, 2004 (as
amended by (a) that certain Amendment No. 1 and Consent Agreement dated as of April 30, 2009, (b)
that certain Amendment No. 2 dated as of August 11, 2009, and (c) that certain Amendment No. 3 and
Consent dated as of October 23, 2009 and as further amended, restated, supplemented or otherwise
modified, the “Credit Agreement”), among BorgWarner Inc., a Delaware corporation (the
“Borrower”), the several banks and other financial institutions from time to time parties
hereto (the “Lenders”), and Bank of America, N.A., as Administrative Agent (in such
capacity, the “Administrative Agent”), Issuing Bank and Swingline Lender. Except as
otherwise specified in this agreement (this “Letter Agreement”), all capitalized undefined
terms used herein shall have the meanings assigned thereto in the Credit Agreement.



     Reference is also made to (a) that certain Receivables Sale Agreement, dated as of December
21, 2009 (the “Receivables Sale Agreement”), by and among (i) BorgWarner Emissions Systems
Inc., a Delaware corporation, BorgWarner Morse TEC Inc., a Delaware corporation, BorgWarner
Powdered Metals Inc., a Delaware corporation, BorgWarner Thermal Systems Inc., a Delaware
corporation, BorgWarner TorqTransfer Systems Inc., a Delaware corporation, BorgWarner Transmission
Systems Inc., a Delaware corporation, BorgWarner Turbo Systems Inc., a Delaware corporation,
collectively as originators and (ii) BWA Receivables Corporation, a Delaware corporation, as buyer
and (b) that certain Receivables Purchase Agreement dated as of December 21, 2009 (the
“Receivables Purchase Agreement” and together with the Receivables Sale Agreement, the
“2009 Receivables Documents”) among BWA Receivables Corporation, a Delaware corporation, as
seller, BorgWarner Inc., a Delaware corporation, as initial collection agent, Wachovia Bank,
National Association, as purchaser and Wachovia Bank, National Association, as administrative
agent, copies of which are attached hereto as Exhibit A.



     Notwithstanding anything in the Credit Agreement or any other Loan Document to the contrary,
each of the parties hereto agrees that Section 6.6 of the Credit Agreement is hereby
modified to permit the Disposition of accounts receivable and assets supporting the obligations
under such transferred accounts receivable in each case in connection with any Receivables Facility
that is permitted under the Credit Agreement. The parties hereto further agree that Consolidated
Total Debt shall not include any Receivables Facility that is permitted under the Credit Agreement
irrespective of whether such Receivables Facility is treated as indebtedness in accordance with
GAAP.



     Effective upon the execution hereof by the Required Lenders, the Administrative Agent and each
Loan Party and the Lenders’ receipt of the final 2009 Receivables Documents and the completion of
the



 









 





Disposition of the accounts receivables subject to the Receivables Facility evidenced by the
2009 Receivables Documents, the Administrative Agent hereby unconditionally and irrevocably
releases and discharges:





     (a) each Lien granted under the Security Agreement that is applicable to the accounts
receivable sold or transferred to BWA Receivables Corporation by BorgWarner Emissions
Systems Inc., BorgWarner Morse TEC Inc., BorgWarner Powdered Metals Inc., BorgWarner Thermal
Systems Inc., BorgWarner TorqTransfer Systems Inc., BorgWarner Transmission Systems Inc.,
and BorgWarner Turbo Systems Inc. pursuant to the Receivables Sale Agreement (and such
assets supporting the obligations under such transferred accounts receivable as are
reasonably required to be subject to such Lien and constitute “Purchased Assets” (as defined
in the Receivables Sale Agreement)), but only to the extent such accounts
receivable and supporting obligations are actually sold pursuant to and
in accordance with the Receivables Purchase Agreement, it being understood and agreed that
this release is a partial release and shall not effect the Administrative Agent’s Liens on
any other Collateral, including, without limitation, (i) any machinery or equipment of the
Borrower or any Guarantor or (ii) to any inventory or goods of the Borrower or any Guarantor
that has not been sold or transferred and given rise to an account receivable transferred by
BWA Receivables Corporation pursuant to the Receivables Purchase Agreement); and




     (b) BWA Receivables Corporation from its obligations under the Guaranty Agreement and
the Security Agreement.



     Each of the Loan Parties hereto and BWA Receivables Corporation represents and warrants that
(a) BWA Receivables Corporation (i) does not and shall not own or hold any assets other than the
Purchased Assets (as defined in the Receivables Sale Agreement), or conduct any operations, other
than those reasonably necessary to comply with the terms of the 2009 Receivables Documents, and
(ii) does not currently have, and will not incur, assume or suffer to exist, any Indebtedness other
than Indebtedness under the terms of the Receivables Facility evidenced by the 2009 Receivables
Documents, with aggregate outstandings at no time exceeding the maximum amounts set forth in the
definition of Receivables Facility in the Credit Agreement and (b) the release of BWA Receivables
Corporation from the Guaranty as contemplated herein does not constitute a release of all or
substantially all of the value of the Guaranty.



     Pursuant to the terms hereof and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the Administrative Agent and
each of the Lenders party hereto each hereby agrees to the modifications set forth in this Letter
Agreement.



     Except as expressly provided herein, the Credit Agreement and the other Loan Documents (and
each of the guaranties set forth therein and the security interests granted therein) shall remain
unmodified and in full force and effect. This Letter Agreement shall not be deemed (a) to be a
waiver of, or consent to, a modification or amendment of, any other term or condition of the Credit
Agreement or any other Loan Document, (b) to prejudice any other right or rights which the
Administrative Agent or the Lenders may now have or may have in the future under or in connection
with the Credit Agreement or the other Loan Documents or any of the instruments or agreements
referred to therein, as the same may be amended, restated, supplemented or otherwise modified from
time to time, (c) to be a commitment or any
other undertaking or expression of any willingness to engage in any further discussion with
the Borrower or any other Person with respect to any waiver, amendment, modification or any other
change to the Credit Agreement or the Loan Documents or any rights or remedies arising in favor of
the Lenders or the



 









 





Administrative Agent, or any of them, under or with respect to any such
documents or (d) to be a waiver of, or consent to or a modification or amendment of, any other term
or condition of any other agreement by and among the Loan Parties or any Loan Party, on the one
hand, and the Administrative Agent or any other Lender, on the other hand. References in the
Credit Agreement to “this Agreement” (and indirect references such as “hereunder”, “hereby”,
“herein”, and “hereof”) and in any Loan Document to the Credit Agreement shall be deemed to be
references to the Credit Agreement as modified hereby.




     This Letter Agreement shall be effective upon the execution hereof by the Required Lenders,
the Administrative Agent and each Loan Party.



     By its execution hereof, each Loan Party, on a joint and several basis, hereby represents and
warrants that after giving effect to this Letter Agreement, (a) each of the representations and
warranties set forth in the Credit Agreement and the other Loan Documents is true and correct as of
the date hereof as if fully set forth herein, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be true and correct as
of such earlier date, (b) no Default or Event of Default has occurred and is continuing as of the
date hereof or would result after giving effect to the transactions contemplated hereunder, (c)
that such Person has all requisite power and authority and has taken all necessary corporate or
other action to authorize the execution, delivery and performance of this Letter Agreement and each
other document executed in connection herewith to which it is a party in accordance with their
respective terms, and (d) this Letter Agreement and each other document executed in connection
herewith has been duly executed and delivered by the duly authorized officers of each Loan Party,
and each such document constitutes the legal, valid and binding obligation of such Loan Party,
enforceable in accordance with its terms.



     This Letter Agreement may be executed in counterparts (and by different parties hereto in
different counterparts), each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. Delivery of an executed counterpart of a signature
page of this Letter Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Letter Agreement.



     THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES.



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     Except as expressly provided herein, the Credit Agreement and the other Loan Documents shall
remain unmodified and in full force and effect.



	 	 	 	 	 
	 	Sincerely,



BANK OF AMERICA, N.A., as

Administrative Agent

 	 
	 
	 	By:  	 	 
	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



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	 	BANK OF AMERICA, N.A., 
as a
Lender, Issuing Bank and Swingline Lender

 	 
	 
	 	By:  	 	 
	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CITIBANK, N.A., as a Lender

 	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	DEUTSCHE BANK AG NEW YORK
BRANCH,
 as a Lender
 	 
	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	MORGAN STANLEY BANK, N.A.,
as a Lender
 	 
	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	KEYBANK NATIONAL ASSOCIATION,

as a Lender
 	 
	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	THE BANK OF TOKYO-MITSUBISHI UFJ,
LTD., 
as a Lender
 	 
	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



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	 	THE NORTHERN TRUST COMPANY, as a Lender

 	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	INTESA SANPAOLO S.P.A., as a Lender

 	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	MERRILL LYNCH BANK USA, as a Lender

 	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



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	Acknowledged and accepted by:	 	 



	 	BORGWARNER INC., as
Borrower

 	 
	 
	 	By:  	 	 
	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER DIVERSIFIED
TRANSMISSION 
PRODUCTS INC., as Guarantor
 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER DIVERSIFIED TRANSMISSION 
PRODUCTS SERVICES
INC.,
 as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER EMISSIONS SYSTEMS
HOLDING INC.,
 as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER EMISSIONS SYSTEMS
INC.,
 as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER EMISSIONS SYSTEMS OF
MICHIGAN INC.,
 as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



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	 	BORGWARNER EUROPE INC., as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER HOLDING INC., as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER INVESTMENT HOLDING INC., as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER JAPAN INC., as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER MORSE TEC INC., as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER NW INC., as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER POWDERED METALS INC., as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



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	 	BORGWARNER SOUTH ASIA INC.,

as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER THERMAL SYSTEMS
INC., 
as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER THERMAL SYSTEMS OF MICHIGAN INC., as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER TORQTRANSFER SYSTEMS INC., as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER TRANSMISSION SYSTEMS INC., as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BORGWARNER TURBO SYSTEMS
INC., 
as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BRONSON SPECIALTIES INC., as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BWA TURBO SYSTEMS HOLDING CORPORATION, as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 





 








 






	 	 	 	 	 



	 	 	 	 	 
	 	KUHLMAN CORPORATION, as Guarantor

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BWA RECEIVABLES CORPORATION

 	 
	 
	 	By:  	 	 
	 	 	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



 
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